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We haven't yet moved to Spain but intend to very soon. I've posted previously about Inheritance Tax and Wills and thanks for the replies (I know about the new rule in Aug 2015 etc so don't need any advice on that). This post is about IHT.

Since my last post, I've spoken with 3 different 'tax specialists' all based in the Malaga area and received conflicting information! I couldn't go into any great detail with them as these were prelim conversations to decide who to use for Estate planning prior to drawing up our Spanish Wills when we arrive in Spain. Two gave me the same info i.e. Spain will take inheritance tax on UK assets if you are a Spanish resident and that a life insurance policy in trust in the UK is still liable to Spanish inheritance tax as trusts are not 'recognised' in Spain.

I also asked whether our personal pensions were liable to Spanish inheritance tax (again UK Govt doesn't take IHT on SIPPs) but was told they would need to look into that further! Does anyone know? I feel like I am going round and round in circles and getting nowhere.

I have discovered that Andalucia has less favourable IHT rules than other provinces, so I am wondering if we should relocate from the UK to maybe Valencia instead? Does anyone have any info on IHT in Valencia that is CORRECT. We know that Spain is based on the person and not the Estate and unlike the UK the IHT has to be paid within 6 months of the death of the first spouse. We have no children, so everything will go to the surviving spouse and when I asked one of these specialists if the Spanish Govt would force the sale of the house for their IHT (based on Andalucia rules i.e. you have a Euro122K exemption before they want IHT on a property), he said they would give up to 12 months but it had to be paid. So when I asked what happens for people who don't have the 'cash' sitting around to pay it, he said people take out bank loans or a life insurance policy! I was gobsmacked by this!

This whole IHT thing is really getting me down. My husband says we just need to get there and enjoy life, but I am one of these practical people who likes the i's dotted etc. So, sorry for rambling, but does anyone have any great suggestions about where in Spain to live where the Spanish Govt are more lenient on IHT than they are in Andalucia? Thanks a lot for any helpful info.
 

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I always thought Andalucia was one of the more favourable places (especially compared to Murcia) but I think it depends on how long you've been resident and whether the surviving spouse plans to continue living in the family home?

In Andalucía, spouses and children are exempt from inheritance tax where the taxable value of the inheritance received is no more than €175,000, and the wealth of the recipient does not exceed €402,678.
 

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Its also based on the castrell value not what you paid for it this is often much less for example ours in 220,000 e where the going rate for house in our area is around the 450,000 e. So 50% o f220,000 t is way below the inheritance level.
 

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PS - the regions such as Andalucia, Valencia etc. aren't provinces, they are autonomous communities (ACs). Provinces are like counties, smaller units within the ACs (e.g. Málaga, Almería). IHT etc are decided at AC level, not provincial level.
 

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PS - the regions such as Andalucia, Valencia etc. aren't provinces, they are autonomous communities (ACs). Provinces are like counties, smaller units within the ACs (e.g. Málaga, Almería). IHT etc are decided at AC level, not provincial level.
I've always struggled to explain this to friends;

Autonomous communities (Valencia, Andalucia etc) of which there are 17 == ?
Provinces (Valencia, Alicante, Catellon etc) of which there are 50 == counties


So, if provinces are like counties what are AC's likened to?
 

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I've always struggled to explain this to friends;

Autonomous communities (Valencia, Andalucia etc) of which there are 17 == ?
Provinces (Valencia, Alicante, Catellon etc) of which there are 50 == counties


So, if provinces are like counties what are AC's likened to?
The equivalent of the Scottish, N. Ireland and Welsh assemblies.
 

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Its also based on the castrell value not what you paid for it this is often much less for example ours in 220,000 e where the going rate for house in our area is around the 450,000 e. So 50% o f220,000 t is way below the inheritance level.
It's not correct to say that it's based in the catastrall value, although people do use that value. The legislation is quite clear that it is based in the market value. Lots of people use the catastral value or at least the value used by Hacienda which Is normally a derivative of the catastral value.

So for example, in the municipality of Malaga, a property with a catastral value of €220,000 would need to be declared at a value of around €350,000 otherwise Hacienda would be asking questions.
 

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It's not correct to say that it's based in the catastrall value, although people do use that value. The legislation is quite clear that it is based in the market value. Lots of people use the catastral value or at least the value used by Hacienda which Is normally a derivative of the catastral value.

So for example, in the municipality of Malaga, a property with a catastral value of €220,000 would need to be declared at a value of around €350,000 otherwise Hacienda would be asking questions.
That's what I thought - there is a multiplier used to get the 'real' value (or a better one anyway).
 
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